TFA will take political will and private participation

This article by Evelyn Suarez first appeared on May 9th at Adam Smith Project.

WTO’s trade facilitation deal has sweeping potential but needs public and private buy-in

   It was big news, at least in international trade circles, when after 10 years of negotiations, the World Trade Organization finalized a Trade Facilitation Agreement (TFA) at its Ministerial Conference in Bali Dec. 7, 2013.

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WIIT Article – Customs: A Hot Topic Once Again


This is an excerpt from an email that first appeared in the WIIT Communiqué. For the full text, visit the WIIT email archive.

We decided to devote this Communiqué issue to customs matters – given recent legislative, regulatory and enforcement activity in the area. We also wanted to highlight a recent World Customs Organization (WCO) gathering of over 100 women, including WCO Director of Compliance and Facilitation Ana Hinojosa and European Union Commissioner for Trade Cecilia Malmström. WCO Secretary General Kunio Mikuriya welcomed the group and emphasized the interest of the WCO to promote engagement with organizations involved in global trade and also to promote gender equality in all aspects of Customs and Trade. The group has been organizing for about a year exploring the feasibility of becoming a chapter of the Organization of Women in International Trade (OWIT), of which WIIT is the DC chapter. A number of our own WIIT members, including Stefanie Holland, Adeline Hinderer, Leslie Griffin, and myself, have offered information on the merits of becoming part of OWIT. I want our friends to know that we are always available to answer questions about being an OWIT chapter. Remember Brussels, you have friends in DC.

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Global Trade Under Fire: What that Means for Africa?

This post originally appeared on the Africa Syndicate Blog on September 10, 2016.

Global Trade Africa WordcloudBy all accounts, international trade is in trouble as anti-globalization sentiment continues to grow across continents especially in the U.S. and Europe.  Some say it’s the slow economic recovery that has fueled protectionist, xenophobic and nationalistic politics that has given rise to Donald Trump and Marine LePen. It is undeniable that there is a popular sense of disenfranchisement or being left behind by many citizens in these nations.

Whether it is the U.K. leaving the E.U. with the infamous vote on “shall I stay or shall I go,” known as Brexit, or the strong opposition to the Trans-Pacific Partnership (TPP) fueled by the rhetoric of the U.S. presidential race, or the struggle to keep the Trans-Atlantic Trade & Investment Partnership (TTIP) negotiations alive, the U.S. and Europe are decidedly headed toward protectionism and isolationism and appear to be turning their backs on well-established economic theory that supports the benefits of free or open trade.

Let’s drill down a little bit further.  Take for example TPP, a high standard comprehensive trade agreement reached after 5 years of rigorous negotiations amongst 12 countries.  Yet, over the past year or so strong opposition to the pact has been voiced with the anti-TPP chants and placards becoming a familiar image of the U.S. presidential election.  It is highly questionable whether the U.S. Congress will pass the necessary implementing legislation to make it law in the U.S. in the lame duck of Congress after the November election.  Without that, the TPP would truly be in trouble given the difficulties entailed with renegotiating an agreement with 11 other countries.  Then, there is the Trans-Atlantic Trade & Investment Partnership (TTIP), the free trade agreement between the U.S. and the E.U., with the French Minister of State for Foreign Trade Matthias Fekl announcing that the French government will officially request at least a temporary cessation of further negotiations at the informal meeting of EU trade ministers in Bratislava, Slovakia, on September 22-23.  This comes after a German economics minister Sigmar Gabriel saying that the TTIP negotiations have “de facto failed.”  Then there is Brexit, with the impending departure of the U.K. from the EU.  And of course the World Trade Organization, whose accomplishments have been limited and its future uncertain with the lack of success of the Doha Development Round.

While Africa is striving for more economic cooperation and regional integration and someday even a Continental Free Trade Area, developed countries seem to be turning their backs on free trade.  What does this all mean for Africa?  Why should Africans care about the populist resentment towards trade in developed nations?  Africans have their own problems, ranging from conflict, to building infrastructure to establishing their places in global value chains.

A significant reason Africans should care about trade is that it has been incredibly important to reducing poverty and creating prosperity.  As noted by the WTO and World Bank Group in the WTO’s Fifth Global Review of Aid for Trade:

A dramatic increase in developing country participation in trade has coincided with an equally sharp decline in extreme poverty worldwide. Developing countries now constitute 48 percent of world trade, up from 33 percent in 2000, and the number of people living in extreme poverty has been cut in half since 1990, to just under one billion people. Trade has helped increase the number and quality of jobs in developing countries, stimulated economic growth, and driven productivity increases.  http://www.worldbank.org/en/topic/trade/publication/the-role-of-trade-in-ending-poverty

That said, globalization has not been perfect and it is true that the gains have been unequal.  By ignoring the cries of those felt behind in the U.S. and Europe, the leaders of the Western world have put open trade and globalization in jeopardy.  A turn toward protectionism will undoubtedly be disastrous for all nations around the globe.  We are simply too interconnected to be immune from such policies.  Anti-globalization measures will limit access to markets and raise prices for consumers.

So what can African nations do to ensure that the global trading system continues to support growth, development and job creation?  Africans should be part of the solution, not the problem.  Let the Nairobi WTO Ministerial be a symbol of Africa as a positive force in restarting multi-lateral trade talks.  Let’s stop the quibbling over whether the talks are under Doha or otherwise.  There needs to be a way forward and African nations can help forge the way by facilitating collaboration amongst developed and developing countries.  On March 17, 2016, in his speech at the University of Cape Town, WTO Director General (DG) Roberto Azevedo quoted from Nelson Mandela’s speech made in Geneva marking the 50th Anniversary of the multilateral trading system.  Mandela said that the WTO “provides the foundation on which our deliberations can build in order to improve. However, to realize the aspirations of all requires wise work to be done.” https://www.wto.org/english/news_e/spra_e/spra114_e.htm

DG Acevedo also addressed the misconception by some that the WTO is a barrier to regional integration by stating that – like the perception that the WTO is a rich man’s club – does not match up with the facts.  The WTO covers 98% of world trade and is comprised of 162 members at all stages of development, 43 of those members are African countries.  He points out the high costs of tariffs of selling within Africa with an African company facing an average tariff of 8.7% when selling within Africa, as opposed 2.5% elsewhere.  He recognized that regional trade agreements have coexisted with the multilateral system and are not a new phenomenon and stated that the WTO supports both efforts.

Africa should employ every means possible, whether through the multilateral system or regionally, to reduce tariffs and to eliminate non-tariff barriers.  Most notably, African nations should be taking advantage of the WTO Trade Facilitation (TFA) Agreement to simplify and standardize customs procedures, thereby reducing the time and cost of moving goods across borders.  DG Acevedo estimates that full TFA implementation could reduce trade costs by an average of 14.5%.  Remember, God helps those who helps themselves.

And yes Africa should take advantage of the programs offered them to establish their place in the global trading system.  For example, Sub-Saharan African countries should be taking better advantage of the African Growth & Opportunity Act (AGOA), which was renewed June of 2015 for a 10- year period.  It is unlikely that the U.S. will again renew AGOA after this 10-year period as a duty preference program so Sub-Saharan countries should be readying themselves for a different relationship with the U.S. based on the mutual benefits of a free trade agreement.

It would be a shame if the global trading system collapsed at a time when African nations are on the cusp enjoying the benefits of global trade and are finally working to establish their rightful places in the global value chain.  If trade chokes then Africans will miss out on the opportunities that the developed world have enjoyed and may take for granted.  As DG Acevedo noted, we are in a very important period right now.  Africans have an opportunity to shape the agenda in a way that can serve the interests of Africans.  There are differences that must be overcome at the WTO of how to address the remaining Doha issues and how to take on new ones that have arisen since global trade has evolved with e-commerce and digital trade.  Developments such as e-commerce actually provide opportunities for small and medium-sized African businesses that never before existed.

Closed borders will hurt all, especially emerging developing countries.  Closing off trade and investment will hit vulnerable nations even harder.  It is not an answer and African nations must speak up now to offer constructive ideas for solving very complicated problems for 21st Century trade.  Can Africans do the wise work that Nelson Mandela said must be done?  I was in Cape Town when Nelson Mandela passed and witnessed the mourning and celebration of his life.  He was an amazing human being.  I was personally touched.  Let’s heed his advice.

Trade Facilitation and Trade Enforcement Act of 2015

Under Trade Facilitation and Trade Enforcement Act of 2015 CBP to Investigate Allegations of Evasion of Antidumping and Countervailing Duty Orders

On February 24, 2016, President Obama signed into law The Trade Facilitation and Trade Enforcement Act of 2015 (TFTE).  TFTE is the first major customs law enacted since the Customs Modernization Act, which was enacted in 1993 as part of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182 (1993).

As to trade enforcement, the law covers three important issues: (1) importer-of-record identification; (2) intellectual property protection; and (3) antidumping and countervailing duty evasion.  This document focuses on evasion of antidumping and countervailing duty orders contained in Title IV of the Act, which is separately titled as the Enforce and Protect Act of 2015.  Title IV sets forth deadlines for Customs & Border Protection (CBP) to investigate allegations of antidumping and countervailing duty evasion.  A timeline for such investigations, prepared by the Office of Regulations & Rulings (OR&R) is available here.

The law requires CBP to make its determinations based upon substantial evidence as to whether the subject merchandise entered the United States through evasion.  CBP is to use techniques, more familiar to the U.S. International Trade Commissions and the U.S. Department of Commerce (DOC) in antidumping and countervailing investigations, of issuing questionnaires, conducting verifications and utilizing adverse inferences.

If CBP makes a determination of evasion, CBP shall: (1) suspend the liquidation of unliquidated entries of merchandise subject to the determination and that enter on or after the date of the initiation of the investigation; (2) extend the period for liquidating unliquidated entries of merchandise covered by its determination and that entered before the date of initiation; (3) notify the DOC of the determination and request that the DOC identify the applicable antidumping/ countervailing duty rates: and (4) require the posting of cash deposits and assess duties on the involved entries.

The person affected by CBP’s determination may file an administrative appeal to CBP within 30 days, which must be decided de novo within 60 days.  The appeal decision is subject to judicial review at the U.S. Court of International Trade (USCIT).  The standard of review at the USITC is whether the determination, finding or conclusion is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

During his testimony before the Senate Finance Committee on May 11, CBP Commissioner Gil Kerlikowske said that CBP will generally take a tougher enforcement stance on U.S. trade laws than in the past, including through aggressive use of the Enforce and Protect Act of 2015 to fight trade remedy duty evasion.  He also said that CBP would issue an interim final regulation for implementing the new law’s duty evasion provisions within the statutory deadline of 180 days, which would occur in late August.

If you would like further information on this aspect of TFTE, please do not hesitate to contact Evelyn Suarez via the Contact form or at esuarez@suarezfirm.com.